The Swamp Stomp

Volume 16, Issue 23

On Tuesday, May 31, 2016 the Supreme Court of the United States (SCOTUS) unanimously ruled in favor of the respondent in the US Army Corps of Engineers (USACOE) v. Hawkes Co., Inc.  The decision ruled that a Waters of the US (WOTUS) Jurisdictional Determination (JD) is a final agency action.  The plaintiff (USACOE) had postulated that it was not and the respondents (Hawkes) argued that it was a final agency action.

Justice Roberts wrote the majority decision for the Court primarily on a Memorandum of Agreement (MOA) between the Corps and the Environmental Protection Agency (which shares authority to enforce the Act).  The MOA states that “final determinations” made pursuant to the MOA “will be binding on the Government and represent the Government’s position in any subsequent Federal action or litigation concerning that final determination.”  This establishes a liability limit, or safe harbor, for the five-year validity period of a negative JD.  Seven of the eight Justices agreed that the MOA was critical to the decision.  Justice Ginsburg did not concur that the MOA was the deciding factor.  However, she did concur with the majority opinion that JD’s are final agency actions.

Justice Anthony Kennedy’s separate but concurring opinion indicated that he had doubts about the government’s power under the Clean Water Act. After observing during oral arguments of this case that the Clean Water Act is perhaps “unconstitutionally vague,” Kennedy wrote in his decision that the law “continues to raise troubling questions regarding the Government’s power to cast doubt on the full use and enjoyment of private property throughout the Nation.”

“The fact that the ruling was unanimous shows that even the liberal justices will not automatically defer to the Obama administration’s Clean Water Act policy interpretations which impact property rights,” said Larry Liebesman, a senior adviser at Dawson and Associates and former Justice Department environmental attorney. “The ruling also suggests that the WOTUS rule will likely face similar scrutiny should it reach the Court.”

The following is from the case brief prepared by the Pacific Legal Foundation (PLF) who is the attorney for the respondent (Hawkes).

Several years ago, Hawkes and its partners sought approval to harvest peat on approximately 150 acres of land adjoining their current operations in Minnesota. The Minnesota Department of Natural Resources was consulted because of its regulation of peat extraction and wetland replacement and restoration associated with it. The U.S. Corps of Engineers also undertook a years-long process to determine whether the land was a wetland subject to the Clean Water Act. During this time, the Corps repeatedly tried to persuade Hawkes to abandon its plans. Representatives emphasized that the permitting process was very expensive (the required assessments alone cost over $100,000), would take years, and ultimately might not even allow Hawkes to harvest peat on the land. A Corps representative even told a Hawkes employee that he should start looking for a new job. Nearly five years after first meeting with Hawkes, the Corps concluded that a portion of the land was a “water of the United States” because it had a “significant nexus” or impact on the Red River of the North 120 miles away. Therefore, according to the Corps, the land was subject to the Clean Water Act. Hawkes disagreed and filed an administrative appeal. A Corps review officer concluded that there was insufficient evidence to support the Corps’ original finding of Clean Water Act jurisdiction.

Rather than allow a judge to consider the validity of the Corps’ jurisdictional determination, the federal government claims Hawkes must first go through an expensive, months- or years-long additional process with the Corps to apply for a federal permit to use the property, which might ultimately be futile or come with conditions that are cost-prohibitive. Thus, Hawkes has three options: (1) undergo the long, costly, and potentially futile federal permitting process; (2) abandon the land, with significant financial losses; or (3) use the land without a permit and risk criminal prosecution and steep fines. Represented by Pacific Legal Foundation (PLF), Hawkes argues that it is absurd to spend years and hundreds of thousands of dollars for a permit that wouldn’t be necessary if the Corps is incorrect about its jurisdiction over the property. The property owners also should not have to forgo their business plans, or risk draconian penalties, without an opportunity to make their case in court.

Landowners are generally prohibited from using property regulated by the Clean Water Act without a federal permit. Even though Hawkes can demonstrate the Corps is wrong about the property at issue, the disagreement with the Corps creates a huge risk for Hawkes if it went ahead and used the property without a permit: the Corps could bring criminal charges and seek fines of tens of thousands of dollars per day.

Thus, it would be commercially foolhardy for Hawkes to use the parcel without some reasonable assurance that the Corps will not interfere with that use. Yet, the agency permitting process is time-consuming, expensive, and sometimes futile. Indeed, the Corps warned Hawkes that the permitting process could take years and Hawkes would have to pay over $100,000 just to submit an application. The Corps indicated it might not even issue a permit.

After losing in the district court, Hawkes asked PLF to help represent them in their appeal to the U.S. Court of Appeals for the Eighth Circuit. In April 2015, the Eighth Circuit ruled in favor of Hawkes, declaring that the agency’s issuance of the JD was “final agency action” that Hawkes could challenge in court. This decision created a circuit split because two other circuit courts had previously ruled against landowners raising the same type of challenge. The Solicitor General (representing the Corps) asked the Supreme Court to resolve the split regarding whether a final agency JD is immediately reviewable in court. In December 2015, the Supreme Court accepted the case for review.

On May 31, 2016 the Supreme Court ruled that Jurisdictional Determinations are final agency actions and can be challenged in court.